IMF head sounds alarm bells over fiscal austerity

An ever-growing majority of economists, including many Nobel laureates, oppose Osborne's policies to

In his Budget speech, the Chancellor George Osborne claimed that: "Our country's fiscal plans have been strongly endorsed by the IMF, by the European Commission, by the OECD and by every reputable business body in Britain."

That was always a dangerous game to play, especially if growth started to disappoint -- which it has. He omitted to mention that an ever-growing majority of economists, including many economics Nobel laureates, oppose his policies tooth and nail.

Both the OECD and the IMF, along with NIESR and the OBR, have downgraded their forecasts for the UK economy and a number of business leaders, especially of high street firms, have expressed their concerns about lack of growth and declining consumer spending.

And now, the boss of the IMF has sounded the alarm bells.

Dominique Strauss-Kahn, managing director of the IMF, in prepared remarks for a speech at the Brookings Institution in Washington on 13 April 2011, warned against cutting budgets too far and creating long-term unemployment.

What about fiscal policy? Advanced countries need to put fiscal positions on sustainable medium-term paths, to pave the way for future growth and employment.

But fiscal tightening can lower growth in the short term and this can even increase long-term unemployment, turning a cyclical into a structural problem. The bottom line is that fiscal adjustment must be done with an eye kept keenly on growth.

The latest data for the fourth quarter of 2010 showed that growth in the UK fell by 0.5 per cent. And it took the coalition a year to prepare its feeble growth plan. The coalition is not serious about growth, as it has its eyes elsewhere.

There is a strong possibility that Strauss-Kahn will resign to run for the French presidency against Sarkozy. In any case, his term expires in June 2012.

Gordon Brown is the obvious candidate to replace him. His recent book Beyond the Crash makes the case for a global effort to solve the problems of what he calls "the first crisis of globalisation". Speaking in Washington at Georgetown University yesterday -- down the road from IMF headquarters -- Brown argued that solving pressing international problems would require a worldwide effort.

We are in a new situation. Problems that . . . are in need of global solutions cannot be solved by one country alone, or bilaterally, or even trilaterally, but can only be solved by the world coming together in co-operative action.

He is saying all the right stuff to head the IMF, a great world institution that emerged from the first Bretton Woods conference.

George Osborne is probably not going to be terribly happy about such a possibility, especially given that he seems to personally dislike Gordon a lot. If Brown were to get the job, it is pretty unlikely that he would say what a great job Osborne is doing.

It turns out that Brown has a lot of support in the US and from other countries and may actually get the post. It would be fun to watch the two of them going at it.

Osborne continues to play the political game of blaming the Labour government in general -- and the former PM in particular -- for the economic problems he inherited.

That we have been faced by a global financial crisis that started in the US housing market and spread to the UK and the rest of the world suggests that these claims are nonsense. That Brown refused to take us into the euro and set up an independent central bank were major achievements.

Let us not forget that Conservative economic policy was to match Labour's spending plans. Our current Chancellor has still not told us what actions he would have taken; presumably because he has no clue.

Would he have rescued the banks? Increased stimulus? What would he have done?

The British people are entitled to know. So if I were to get to interview George, I would ask him this simple question -- what would you have done differently in the crisis?

Interestingly, claims that all our economic problems are Labour's fault no longer seem to be resonating with the public. The latest YouGov/Sunday Times poll of 2,206 British adults conducted on 7 and 8 April 2011 asked: "Do you think the coalition government is managing the economy well or badly?" 37 per cent said well, while 53 per cent said badly and 10 per cent said they didn't know. When asked about the state of the economy, 77 per cent said it was bad; a further 62 per cent said they expected that the financial situation of their household would be worse in 12 months time.

Support for Osborne's strategy is crumbling in the country. Support is likely to fall further when the GDP numbers for the first quarter of 2011 are published on 27 April, which is likely to be well below the 0.8 per cent the OBR is forecasting.

I am expecting a number around 0.2 per cent or 0.3 per cent at best, with worse to come later in the year. Strike the IMF from the list of organisations that Osborne claims support his reckless policies.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Young people want big ideas – that's why I refuse to dumb down Radio 4

My week, from finding a way through the fog to getting the quarterly audience figures.

I walk to work through Regent’s Park, when possible accompanied by my dogs, which my husband then collects on his bike ride and takes home. If there is time we have coffee together in the small hut just before the inner circle. This is a good way to listen to the Today programme, I find, as I can keep one ear in, achieve a rational, critical detachment and still enjoy the birds, and then add the other ear if a strong interview demands immersion, or take both out altogether when despair creeps up. On the subject of Today, I hope to have some fun with Sarah Sands, whom we have just appointed as the programme’s new editor; it’s good to see an experienced woman brought in at a senior level to the BBC.

 

A winter’s tale

The park through the seasons has become something of an addiction, measured out by inspired planting of appropriate annuals, the names of which I note and discuss with the gardeners when I dare interrupt them.

Memorable events occur quite frequently during this walk: I once stumbled upon a proposal of marriage involving a beautiful young woman who once had worked for me; an elderly Chinese gentleman practises t’ai chi regularly at a certain spot and I imagine talking to him about the changes he has seen in his lifetime back home. I have seen a rare green woodpecker on the grass pecking boldly in plain sight, and hopeless ducks, silent, puffed up, marooned in the fountains, unable to find their way back to the ponds, so close by.

At the start of winter, while walking home one day, I got stuck in the park, with a group of other stragglers, as the gates locked with the onset of darkness. Rather than retreating the way I had come, I accepted the offer (from a rather good-looking stranger) of a lift down from the top of the gate. The atmosphere then was alive, exhilarating, with crowds heading for the Frieze Masters marquee. How different it all is now, in 2017. There’s a new mood, a new American president, a new era.

 

Musical interlude

Recently, Roger Vignoles – the glorious pianist and a close friend – was playing, as he often does, in a lunchtime concert recorded for Radio 3 around the corner from Broadcasting House at the Wigmore Hall, with the baritone Roddy Williams. French songs: Fauré, Poulenc, Honegger, with a handful from Caplet (the latter quite new to me). All thoughts of politics fled, giving way to “L’adieu en barque”, set late one summer’s day on the river, a moment to clear the fog, both within and enveloping us that day in London.

I left an hour later in clear sunshine, feeling smug because we have commissioned Roddy’s Choral ­History of Britain for Radio 4 later this year.

 

Power trip

Waiting for coffee to brew, I was discussing Book of the Week with Gill Carter, commissioning assistant on this slot, when my drama commissioner, Jeremy Howe, put his head round the door. “Clarke Peters (yes, the one from The Wire) is here reading The Underground Railroad for Book at Bedtime.” Assured, deep tones rang out from a tiny studio on the third floor. “I have to keep stopping,” he said, as I thanked him.

Who could not be overcome by this story of slavery and bravery at this moment in American history? I am so glad to bring it to listeners this month. “Can you help?” the producer pleaded as we left. “We’re about to be thrown out of the studio.” That’s real power, I thought, as ten minutes later Jeremy had conjured up the extra time.

Clarke Peters will be back in the autumn with a series about the real history of black music in the UK which, he says, is little understood.

 

Culture and anarchy

This is the time of year when we launch the commissioning round calling for big ideas for next year. It’s a humbling thing to stand in our beloved art-deco Radio Theatre in front of hundreds of programme-makers, hoping that they will be inspired to bring “the best which has been thought and said in the world” (my guiding principle from Matthew Arnold).

I try on these occasions to lay out a little of how I see the shape of the world in the commissioning period ahead. This year the Loneliness of the Long-Distance Runner overcame me. Better perhaps simply to outline the way we commissioned the first week of 2017 to catch the mood. T S Eliot, more or less all New Year’s Day, read by the formidable Jeremy Irons, raised an echo of the Thirties, then a factual series of considerable documentaries across the week described The New World, followed by writers around the globe Imagining the New Truth.

Finally, inspired by Twelfth Night and the spirit of misrule, the comedy writer John Finnemore, one of our favourites, took over as the Lord of Misrule himself.

The imaginative world and writers have never been more needed. Whether it is truth or post-truth, I suspect that dramatic, imagined and creative truth when properly achieved is probably the nearest we can ever get to truth itself.

 

Tuning in

It’s the week of Rajar. These are quarterly audience figures for radio. In the past few months, they tell us, over 11 million people have listened each week to BBC Radio 4, setting new records. Just under half are below our average age of 56 and 1.5 million are under 35. At the moment we seem to have over two million weekly visitors to the website and roughly 20 million monthly global downloads.

Who says young people don’t want intelligent content? Who says that dumbing down is the only way to attract big audiences? We at Radio 4 try to be all about smartening up. We mark Rajar Day (whether the numbers are up or down) with cake, so I make my way to Paul for two tarts, pear and blueberry this time.

Gwyneth Williams is the controller of BBC Radio 4

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times